RAGA president W. George Krasnow at The Voice of Russia. Live Debate “Legal Scourge from the West: What’s Behind the Epidemic of Lawsuits against Russia”.

Russia should refuse to pay and counter-sue the United States for meddling in her internal affairs and helping the oligarchs loot Russia during the 1990s.

Recent legal challenges against Russia coming from the West are mind-boggling in their severity, recklessness and timing. In The Hague, the Permanent Court of Arbitration ruled that Russia should pay $50 billion to the former share-holders of the now defunct YUKOS oil company. In Strasburg, the European Court of Human Rights, in another lawsuit of YUKOS people, issued a verdict for $81 billion, but then reduced it to a $1 billion 860 million. These decisions came on top of a premature “guilty” verdict Russia got in a flood of Western accusations for its unproven role in downing of the MH17 passenger plane over Ukraine’s territory.

“Legal Scourge from the West: What’s Behind the Epidemic of Lawsuits against Russia” was the topic of a Voice of Russia radio debate which took place on July 31, 2014. Anchored by Dmitry Babich, the debate featured two legal experts from London and attorney-at-law Aleksei Benetsky from Moscow. As president of Russia & America Goodwill Association (RAGA) I was invited to represent the United States.

I stated at once that my approach reflects RAGA’s philosophy of non-interference in each other’s domestic affairs. As to the question whether Russia should maneuver to reduce the verdicts, my answer was unequivocal: Russia should refuse to pay altogether and, instead, challenge the United States for meddling in its internal affairs and helping oligarchs loot Russia during the 1990s.

The best description of this meddling is Janine Wedel’s book Collision and Collusion: The Strange Case of Western Aid to Eastern Europe. An anthropologist, Wedel argues that the collision between two groups of people, Russian reformers and their American advisers, whose cultural patterns and mentality were too different, was inevitable. Instead of a meaningful open cooperation, the collision degenerated into collusion between the least conscientious on both sides.

Contrary to US rules that require competitive bidding, says Wedel, the now defunct Harvard Institute for International Development (HIID) got the exclusive contract for reforms in Russia because the rules were suspended “for foreign policy considerations”. Thus, the door for the collusion of HIID operatives with the Gaidar-Chubais clique was open. As a result, Andrei Shleifer, his wife Nancy Zimmerman, his assistant Jonathan Hay and Hay’s girl-friend, all members of the HIID team in Russia, were charged with violating US contractual rules, and Harvard University was forced to pay back to US tax-payers $26.5 million, the largest penalty in its history.[1]

As to the outrageous court verdicts, I asked: Can’t Russia argue that, due to the US meddling in Russian economic reforms, Russian people were robbed and therefore ought to be compensated in trillions of dollars? If their country was looted by the oligarchs, such as Khodorkovsky, why do Russians need to pay to YUKOS a penalty on top of being looted by his company?

After the anchor Dmitry Babich confirmed that at least two of YUKOS associates, Leonid Nevzlin and Yuli Dubov, are convicted criminals hiding from Russian law in Israel, the questions I raised acquired additional acuity.

To support my argument I recited the titles of American books that could be used in court as testimony, should YUKOS people insist on the unjust court verdict.

Here they are:

Paul Khlebnikov, an American editor of Russian edition of Forbes magazine, wrote a book about Boris Berezovsky’s rise to oligarchy, Godfather of the Kremlin: The Decline of Russia in the Age of Gangster Capitalism. Khlebnikov was assassinated in Moscow in an unresolved case.

Chrystia Freeland, Sale of the Century: Russia’s Wild Ride from Communism to Capitalism.

All of the above authors (except co-author Glinsky), are North Americans, with lots of experience and expertise in Russia. Just think about the titles. All of them are damning the reforms we, Americans, sponsored. Yet, our media unfairly jumped on Russia’s president Vladimir Putin for calling the dissolution of the USSR one of the greatest calamities in Russian history. They accused him of wishing to restore Soviet Empire while he was talking not just about the events of 1991, but their aftermath in the 1990s. Aren’t our own authors are just as resolute in condemning that calamity?

Well, there is one more book that may relate to the YUKOS people and their legal challenges to Russia. It is Robert Friedman’s Red Mafyia: How the Russian Mob Has Invaded America. The title is loaded with suggestive possibilities as it raises questions about the state of health of American society.

The problem started with first Soviet Jewish refugees who, fleeing persecution in early 1970s, were allowed to re-unite with their families in Israel, but instead settled en masse in Brighton Beach. Over half a million were eventually brought to the USA. As the Amazon site 2001 ad for the book puts it, "In North America alone there are now thirty Russian crime syndicates operating in at least seventeen U.S. cities, most notably New York, Miami, San Francisco, Los Angeles, and Denver. The Russians have already pulled off the largest jewelry heist and insurance Medicare frauds in American history, with a net haul exceeding $1 billion. They have invaded North America's financial markets, orchestrating complex stock scams, allegedly laundering billions of dollars through the Bank of New York, and coolly infiltrating the business and real estate worlds”.

Could it be that these criminals have not only participated in the looting of Russia but also infested US mass media? At any rate, since I came to the States in late 1960s, US mass media has become a lot more monolithic and anti-Russian than it ever was during the Cold War when attitudes to the USSR varied greatly but were usually restrained. Perhaps the rot of the oligarchy took root in the USA as well? Perhaps it is they who now make the West challenge Russia in Ukraine, with silly sanctions and unfair court verdicts? Aren’t the new Ukrainian leaders are just another set of oligarchs bent on enforcing the criminal rule “Winners take all”?

There was also a book that is not easy to find. It is “The Rape of Russia” by Anne Williamson. That’s what Williamson stated before the Committee on Banking and Financial Services of the US House of Representatives on September 21, 1999:

“... In the matter before us – the question of the many billions in capital that fled Russia to Western shores via the Bank of New York and other Western banks – we have had a window thrown open on what the financial affairs of a country without property rights, without banks, without the certainty of contract, without an accountable government or a leadership decent enough to be concerned with the national interest or its own citizens’ well-being looks like. It’s not a pretty picture, is it? But let there be no mistake, in Russia the West has truly been the author of its own misery. And there is no mistake as to who the victims are, i.e. Western, principally U.S., taxpayers and Russian citizens’ whose national legacy was stolen only to be squandered and/or invested in Western real estate and equities markets.” [2]

The above books aside, there is a testimony about US wrong doings during the 1990s from American diplomats. One of them E. Wayne Merry, Chief Political Analyst at the U.S. Embassy in Moscow from 1990-1994, sums up the role of the US thus: “we created a virtual open shop for thievery at a national level and for capital flight in terms of hundreds of billions of dollars, and the raping of natural resources and industries on a scale which I doubt has ever taken place in human history.” As to the claim U.S. has the mission to promote democracy throughout the world, Merry’s observations in Russia tell us otherwise: “I think the election of December 1993 was a clear and legitimate expression of Russian popular will and a rejection of the economic policies that Washington and the Treasury Department and the IMF had pushed on Russia. And when faced with popular rejection, the choice was to ignore popular will and to press on with the policy, and I think there was a huge cost on the long-term development of rule of law and constitutional government in Russia for making that choice.” [3]

While the crucial wrong-headed decisions about US policy in Russia were made during Bill Clinton’s Democratic tenure at the White House, the Republicans can hardly be exempt from failing to take into account long-term interests of the American people. Jason Cherkis and Zack Carter of The Huffington Post claim that Mitt Romney's Bain Made Millions On Big Tobacco In U.S., Russia. After In March 1993, the American government gave Bain & Co. a $3.9 million contract to advise Boris Yeltsin's administration on the privatization of the Russian economy, Romney’s company helped Philip Morris and other Western tobacco brands increase their sales in Russia many times over, as they bought some of the largest Russian facilities for a pittance and then marketed to Russian consumers such attractive nicotine products that the number of Russian teen-age girls hooked on tobacco jumped from 7% to 21%. I wonder what these girls are now thinking of Uncle Mitt, a devout Mormon, who refuses to smoke.

As the American reporters sum up Bain’s activity in Russia and its ultimate outcome,

“It was part of a free-for-all that involved wholesale looting of major industries, as Western technocrats helped facilitate the transfer of Russia's wealth into the hands of a few oligarchs. That set in motion a populist backlash that helped sweep Vladimir Putin into power, giving the Kremlin dominance over a country Romney has lately called our "number one geopolitical enemy."[4]

After the interview I decided to consult a lawyer and put these questions to an outstanding American legal scholar. The reply was brief but to the point: “(Jeffrey) Sachs (the author of shock therapy prescription for Russian reforms which the HIID helped implement)) should be put in jail for inflicting near genocidal conditions upon the Russian people while at Harvard. Khodorkovsky was just another oligarchic crook, made a hero by the West”.

The conclusion I make is that all the accusations the USA and the West are making against Russia right now are without merit. They are unfair to Russian people. They are also counterproductive to long-term interest of American people. They gravely undermine the credibility of the West in the eyes of all Russian people, especially so among those pro-Western Russian democrats and liberals who used to admire Western standards of justice and civility.

[1] For details see my two articles under the name of W. George Krasnow, published by Johnson Russia List. Would Harvard Ever Help Russia? March 10, 2006; and Did Shock Therapy Help Russia?About Anders Aslund’s Capitalist Revolution, May 6, 2008.